HSBC: China investments will help drive PH growth

China’s bid to forge greater intra-regional ties will benefit the Philippines and help drive economic growth, the head of investment strategy for Asia of HSBC said.

Under a “new world order” where China is promoting its Belt and Road Initiative, HSBC’s Fan Cheuk Wan said
Beiing would “become even more engaged in the regional economy … and enhance its cooperation with Asian trade partners including Asean (Association of Southeast Asian Nations)”.

Chinese infrastructure investments in the Philippines, in particular, are expected to “be sustained”.

“This collaboration is going to underpin a relatively strong growth outlook in infrastructure investment in the Philippines, which has been one of the key growth engine of the local economy,” she pointed out in a press briefing.

“If you look at the data in 2017, Chinese direct investments sustained its strong growth and this would likely be the trend in 2018,” the HSBC official said.

“More and more Chinese are seeking growth opportunities … with the robust domestic growth in the Philippines this also offers opportunities for Chinese companies.”

The Belt and Road Initiative, a development strategy unveiled in 2013, calls for the creation of land corridors and a maritime “silk road” that will link around 60 countries in Asia, Africa, the Middle East and Europe at a cost of around $4-8 trillion.

HSBC expects the Philippines to post 6.7 percent growth this year on the back of higher consumption and government expenditures.

It said that private construction would bounce back as the government pushes through with its infrastructure plans, which should spur greater private sector engagement.

A decline in net exports remain a drag on the Philippine economy, it noted, but this remains largely due to of high imports of capital goods and raw materials for the government’s planned infrastructure projects.

The most immediate risk to the economy is inflation, HSBC said in March, which has continually breached the Bangko Sentral ng Pilipinas’ 2.0-4.0 percent target since the beginning of the year.

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